TOPIC: Going Deep for Digital

LOS ANGELES, Sept. 25 - Last March, executives from the Walt Disney Studios approached the visual-effects wizards at George Lucas's company, Industrial Light & Magic, with an audacious request. Could they convert the forthcoming Disney animated film "Chicken Little" into 3-D?
In less than four months?

"We gave it serious consideration, and we decided they were out of their minds," said Colum Slevin, senior director of computer graphics at Industrial Light. "'Fourteen hundred shots in 14 weeks? You're dreaming.'"

But Disney persisted. And Mr. Slevin's team of techies came through, as audiences will be able to see for themselves beginning Nov. 4, when "Chicken Little" opens across the country - and in at least 85 movie theaters equipped with costly state-of-the-art 3-D projection equipment, silver screens and the latest in goofy-looking 3-D eyewear.

The 3-D technology is more advanced than anything audiences will remember from the 1950's or even from recent hits like "Spy Kids": no red-and-cyan lenses, no eyestrain, no headaches. And no bulky electronic glasses like at Imax theaters. "You've not seen anything quite like this," Richard Cook, Disney's studio chairman, assured hundreds of exhibitors and others before showing them a sample on Thursday.

All but lost in their excitement over the technology is a huge milestone for Hollywood: the 3-D release of "Chicken Little" first requires the conversion of those 85 theaters to digital projection technology.

For years, the movie industry has been struggling to replace its expensive film distribution system with digital technology. For the studios, the change promised huge savings: about $1 billion a year is spent making film prints and shipping them to thousands of theaters.
For theater owners, it meant smaller savings, but improved quality. A movie could run for weeks - or indefinitely - without the scratches and other defects that become noticeable after as few as 10 screenings of a celluloid print.

Last month, the Hollywood studios finally settled on a set of technical standards for the digital cinema introduction. Also recently, the studios, theater owners and equipment vendors have reached consensus on the basic framework to pay for the change to digital, which costs about $85,000 an auditorium.

All that was missing was a catalyst for making the investment. Proponents of digital cinema are hoping it will be provided by 3-D movies like Disney's "Chicken Little" and next summer's "Monster House," from Columbia Pictures and the director Robert Zemeckis. Given that Mr. Zemeckis's "Polar Express," from Warner Brothers, earned roughly 10 times as much in Imax 3-D as it did in 2-D, that is a big catalyst, executives say.
"3-D, at the moment, is driving the bus on this digital rollout," said Michael V. Lewis, chairman of Real D, a Beverly Hills optics company that developed the equipment and eyewear to bring "Chicken Little" to theaters in 3-D.

But there is also a fairly sizable school of thought among studio executives - and influential filmmakers like James Cameron, who has said he will shoot only in 3-D from now on - that 3-D, despite its history as a fad, could this time have a momentous effect on cinema, the way silent movies gave way to talkies and black-and-white to color.

"I honestly don't think it's a novelty," said Charles Viane, president of distribution for Disney, which may release all its future animated movies in 3-D should "Chicken Little" meet expectations at the box office. "I think you'll miss the dimensionalization in movies that don't have it."

"Chicken Little" would not be coming to market in 3-D had Disney not been impatient to break the stalemate between studios and theaters over digital conversion. But it also required significant leaps forward in technology, which the four-year-old Real D and the 25-year-old optics company it acquired in February, StereoGraphics, had been pursuing for some time.

Unlike some old-fashioned 3-D movies, the Real D process uses a single projector, but it merges two data streams, one for each eye. Because the projector is digital, it can project images far faster than 24 frames per second, the film standard. So "Chicken Little" will be shown at 144 frames per second, alternating left- and right-eye images faster than the eye can detect.

The hard part of 3-D is to make sure the left eye sees only the left image, and vice versa. Real D, executives say, does so with an adapter mounted on the projector that polarizes each alternating image so that it can be seen only through the appropriate lens on Real D's cheap disposable glasses.

The system is hardly perfect. It requires installing a special silver screen, which is a disadvantage for showing standard movies; the rapid frame rate slightly diminishes the resolution of the image, from 2,048 pixels to roughly 1,700; and even Real D executives acknowledge the system would be impractical for theaters with more than 300 seats because of screen size constraints.

But executives from some of the 22 theater chains that have signed up so far - among them AMC, Loews and Regal - say they prefer it to a competing system, from In-Three and NuVision, that would use standard screens but require costly electronic eyeglasses, forcing theaters to spend money sanitizing, maintaining and securing them.

The main disadvantage of the Real D system is cost: the company charges at least $50,000 upfront for each theater, and $25,000 a year.
Tom Stephenson, president and chief executive of Dallas-based Rave Motion Pictures, said he had signed up to convert 9 of his 300 screens to Real D and was exploring whether to charge a dollar or two more for tickets, or whether increased ticket sales and concession receipts would ultimately cover his costs.

Real D guarantees at least two 3-D movies will play in those theaters each year, Mr. Stephenson said. "Is that enough? No, but if it turns out people are really drawn to this technology, you'll get more than that."
Among prominent filmmakers, who are eyeing dwindling box-office figures just as uneasily as theater owners, several have seized on 3-D as almost a panacea.

"As the public's home television and sound systems get better and better, what is the reason they have to go to the movies?" said Jon Landau, a partner in Mr. Cameron's company, Lightstorm Entertainment, which is making the action fantasy "Battle Angel" in 3-D. "We believe 3-D is one of those things that people will come out of their homes in droves to see. From the big-scale movies to the small dramas - if you have somebody on their deathbed, and an intimate moment, you are much better off dropping the barrier of the screen, putting the audience in that moment, and putting it in 3-D."

Whether the next "Terms of Endearment," let alone the next "Terminator," will be seen by millions in 3-D is anybody's guess, of course. But the digital introduction, on which 3-D technology will piggyback, is picking up speed. After months of wrangling between the studios and several vendors, the first deals are being signed that could lead theater owners to buy and install digital projectors.

The structure of the deals follows a pattern. Theater owners pay roughly $10,000 toward the $85,000 cost of converting each auditorium. The balance is recovered, typically over 10 years, from the movie studios, which pay "virtual print fees."

These fees, which start at around $1,000 for each copy of a movie delivered to a theater, are intended to approximate the studios' financial savings on film prints and shipping. They have agreed to steer that money to the suppliers of digital cinema equipment.

Under the first major deal announced so far, Disney said on Sept. 15 that it would pay virtual print fees toward the installation of projectors from Christie Digital Systems USA, under a nonexclusive deal financed by Access a start-up that is hoping to carve out a slice of the expected market for digital distribution to theaters.

The gamble for Access, of Morristown, N.J., is that studios will release enough digital movies, and agree to pay the virtual print fees, to cover the cost of the equipment and installations - and to lower the cost of capital for a company with just $12 million in trailing 12-month revenue.

"Somebody's got to be willing to put up what somebody has called brave equity to get something like this going," said A. Dale Mayo, a former theater owner who is chairman and chief executive of Access.
Lurking around the corner, however, are film industry heavyweights like Technicolor, a unit of the Paris-based media services company Thomson, along with its rival Deluxe and the sound company Dolby has financed the purchase of digital systems for those theaters converting soon, for "Chicken Little" for example, hoping to gain exposure for its own servers and cinema management software.

So goes the competition on the digital frontier. "It's street-fighting right now," said Jack Kline, president and chief operating officer of Christie Digital.

"In order for the market to have confidence in the digital experience, we need real experience," said Michael Karagosian, digital cinema consultant to the National Association of Theater Owners. "We need at least 1,000 systems, with all the vendors delivering content to theaters in a flawless way, so the movie arrives, it's shown, the audience is entertained with the same reliability as today with film."

That's a tall order, he cautioned. "We now have a 99.98 percent availability rate" for film projection, he said, referring to the incidence of equipment malfunction. "That means that 2 out of 10,000 shows fail, where you have to get a voucher. We don't expect to hear, 'The server didn't work.' But there are plenty of stories already about expired encryption keys, the date set wrong, somebody didn't push the right button."

He added, "We're talking about putting desktop technology in the theater. Do you trust your boot-up every time?"

I am not sure every moviegoer will be thrilled with the idea of 3-D technology. It seems like 3-D could have an ill-effect on some people.

How are us little gals and guys going to compete? Surely I cannot afford the $50,000 up front cost of the Real D system, let alone pay a $25,000 yearly fee. I may be able to manage buying the regular digital projectors at the stated price in the article, but having to buy and install a silver screen that would have to be moveable could be quite costly. Would the benefit outweigh the cost?

Do you think they are finally making progress in their attempt to get us all to switch over? One thing for me is I sure wouldn't miss lugging those heavy 4-reel cans or 6- or 7-reel boxes up the stairs to the booth, around the maze of equipment, and over to the make-up area.